Activision to Acquire King Digital Mobile Games IP for $6B

Activision, already the largest and most successful interactive entertainment publisher in the business, fortifies its market position mightily with the move.

Activision Blizzard, publisher of such highly successful console video games as Call of Duty and World of Warcraft, revealed Nov. 2 that it will purchase King Digital Entertainment, creator of Candy Crush Saga, for $5.9 billion.
Activision, already the largest and most successful interactive entertainment publisher in the business, fortifies its market position mightily with the move. A major gap in its portfolio was lack of a significant number of successful mobile games, so the addition of King Digital fills that need immediately.
Santa Monica, Calif.-based Activision Blizzard has one notable mobile presence in the U.S.: Hearthstone, a PC and mobile game that the company claims has more than 25 million players. However, that game is nowhere in the ballpark of the Candy Crush player base; King Digital claimed 474 million monthly active users in Q3 2015.
Dublin, Ireland-based King Digital has reported annual revenues of $2.2 billion, of which approximately 80 percent are from mobile games.

Activision Blizzard also created and distributes the Destiny, Guitar Hero, and Skylanders titles. However, the company was slow to market with mobile games for smartphones and tablets. Mobile games spending, according to market researcher IHS Technology, will total $32 billion in 2015; in fact, mobile games are the largest mobile content category and also now comprise the largest games audience worldwide.

The NPD Group has reported that over the past 12 months, mobile games accounted for 19 percent of the total global spend on video game software.
In opting to acquire rather than build, Activision will own the newest $1 billion game, Candy Crush, which enables it to soothe shareholder anxiety over competition to, and performance of, Call of Duty and Skylanders.
Owning King Digital provides Activision access to a new audience of about 340 million gamers across mobile and PC platforms, IHS said. Activision plans to run King in a similar fashion to Blizzard—as a separate division and at arm's length.
IHS forecasts mobile and tablet game spending to grow from $32 billion in 2015 to $40 billion in 2019. The researcher estimates that about 70 percent of King's daily active users are still linked to Candy Crush-franchise-related games, and with that audience currently in decline, "King faces an uphill challenge maintaining its commercial scale—even with new games coming to market," it said in a media advisory.